Nonresidential spending reaches new high in August

National nonresidential construction spending expanded 0.7% in August to its highest level since the U.S. Census Bureau began the data series in 2002, according to an Associated Builders and Contractors analysis released today.

Total nonresidential spending stood at $762.7 billion on a seasonally adjusted, annualized rate in August, which represents an increase of 8.4% compared to one year ago. Private nonresidential spending fell 0.2% in August largely due to a 1.3% decline in power-related spending, the largest private construction spending category, and public nonresidential spending increased 2%.

“The good news on the nation’s economy and the construction sector just keeps coming,” said ABC Chief Economist Anirban Basu. “The increase in overall nonresidential construction spending was reasonably predictable given the predominance of positive leading indicators such as ABC’s Construction Backlog Indicator, which reported record-setting 9.9 months of backlog in the second quarter of this year, and the Architectural Billings Index. In addition, the recent pattern of stable private construction spending coupled with growing public spending remained in place in August.

“Rising property values, ongoing rapid job creation and a confident consumer translates into rising real estate values, income and retail sales tax collections, which in turn creates additional resources to invest in infrastructure,” said Basu. “That helps explain the chunky year-over-year spending increases in a number of primarily publicly financed categories, including water supply, which increased 37%; conservation and development, 34%; transportation, 23%; and highway/street, 14%.

“It is quite possible that construction spending growth will accelerate from current levels,” said Basu. “Aside from the strong economy, ongoing increases in materials prices and worker compensation is translating into rising project delivery costs, which, all things being equal, produces faster construction spending growth.

“For now, rising construction and borrowing costs are not stifling economic activity,” said Basu. “However, purchasers of construction services may be increasingly inclined to postpone projects if costs continue to rise, which is likely. And while contractors remain concerned about the overall construction workforce shortage negatively affecting project deadlines, the near-term outlook remains robust.”

One of Bristlecone Construction’s recent projects is Ogden Street Flats, a 29-unit, $8.4 million apartment building in Denver that will integrate an existing 1930s auto shop with the new five-story structure. Bristlecone will complete the concrete and framing, and provide General Contracting Services. Rendering: Range Design and Architecture

HITT Contracting’s Co|Lab facility, set to open next summer, will be dedicated to testing products and ideas that will have a direct impact on the building industry. Designed by William McDonough + Partners, the cross-laminated timber (CLT) structure will serve as an exhibit, telling the story of mass timber buildings, living walls, and HITT’s application of VDC methodology and tools on the project. Courtesy HITT Contracting.

Boston University's Goldman School of Dental Medicine will increase its clinical space by 60% through a renovation and addition that are being conducted while the school stays open and continues to offer its services to students and the community. Image: SmithGroupjjr